Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Social Achievements

• Added 4 additional doctors to our Medical Advisory Board, bringing the total number to 6 members representing the plastic surgery, facial plastic surgery, and cosmetic procedure specialties.

Governance Achievements

• Formed the Regulatory Compliance Committee in the third quarter of 2019.

Climate Goals & Targets

Environmental Challenges

• Continued aggressive EPA state regulation of Ethylene oxide sterilization (EtO) commercial plants resulting in additional plant closures, leading to a reduced availability of our handpieces, which are commercially sterilized.
• The recent Coronavirus outbreak...may continue to adversely affect our business operations, employee availability, financial condition, liquidity and cash flow for an extended period of time.
• Fluctuations in the price, availability and quality of the raw materials and subcontracting services we use in our manufacturing could have a negative effect on our cost of sales and our ability to meet the demands of our customers.
• Our manufacturing facilities are located in Clearwater, Florida and Sophia, Bulgaria and could be affected by multiple weather risks. Most notably hurricanes in Clearwater, Florida.
• Changes in U.S. trade policies could significantly increase the cost of imported goods into the United States, which may materially reduce our sales or profitability.

Mitigation Strategies

• We maintain a backup generator at our Clearwater facility and a disaster recovery plan is in place to help mitigate this risk.
• The Company intends to continue to execute on its strategic plans and operational initiatives during the coronavirus outbreak.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• the impact of climate change and weather conditions
• the impact of weather events, including potentially hurricanes, tornadoes and/or seasonal extremes

Environmental Metrics

ESG Focus Areas

• Energy Management
• Water and Waste Management
• Ethical Marketing
• Product Safety & Quality
• Supply Chain Management
• Human Capital Management
• Community Engagement
• Business Ethics
• Data Privacy & Security
• Corporate Governance

Environmental Achievements

• New air conditioning units with monitoring features
• Conversion of fluorescent tubes to LED lights
• Ultraviolet Water Purifiers for drinking water
• Automatic timed lights
• Low volume bathroom fixtures for water savings
• Fibertite roof to reflect light and save energy
• Recycling of aluminum cans, plastic bottles, electronics, and fluorescent lightbulbs
• Hazardous waste disposal by accredited third-party

Social Achievements

• Annual performance reviews with discussion of growth opportunities
• Leadership development training courses
• Internship program resulting in part-time regular employees
• Internal promotions (6% of staff)
• New hire and employee exit surveys to improve onboarding and retention
• Employee referral program
• Suggestion boxes and software for employee feedback
• Open-door policy
• Quarterly service recognition event
• Hybrid onsite/offsite work policy
• Tuition reimbursement program
• 401k plan with 90% participation rate
• Preventative medical appointment drawing for prizes
• Monthly wellness events
• Annual diversity training
• Partnership with Mildred Helms Elementary school for supplies

Governance Achievements

• Code of Conduct reviewed and updated annually
• Third-party whistleblower hotline (no reports since 2019)
• Annual ethics notification to suppliers
• Supplier audits every three years
• IT Security policy reviewed and updated annually
• Third-party cybersecurity audit (Q1 2022)
• Established IT General Controls environment as part of SOX compliance

Climate Goals & Targets

Environmental Challenges

• Reducing energy footprint
• Reducing environmental impact of packaging
• Maintaining traceability within the distribution chain
• Managing risks associated with the use of critical materials
• Employee turnover (15% in 2021)
• Data security breaches

Mitigation Strategies

• Implementing energy-saving measures (see Key Achievements)
• Conducting a life cycle assessment of packaging
• Maintaining traceability in SAP ERP software
• Supplier qualification and annual surveys/assessments
• Employee surveys and feedback mechanisms
• Hybrid work policy
• Annual IT Security training and third-party cybersecurity audit

Supply Chain Management

Supplier Audits: Every three years for critical suppliers

Responsible Procurement

• Supplier qualification
• Approved supplier list
• Annual surveys/assessments
• ISO 13485 or 9001 certifications for critical suppliers
• Certificates of analysis or conformance for critical parts and services
• Incoming inspection of components

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SASB

Certifications: MDSAP, ISO 13485:2016

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Employee participation in a local beach clean up event

Social Achievements

• Week-long high school internship/shadowing program for students interested in the field of engineering
• Hosting a group of 25 local students participating in their school’s STEM program at our manufacturing facility
• Donation of supplies to a local elementary school and to support those impacted by Hurricane Ian
• Local food drive donations as well as gifts for less fortunate children during the holidays
• Several financial contributions and sponsorships to various non-profit organizations

Governance Achievements

• Published first ESG report aligned with the Sustainability Accounting Standards Board (“SASB”) Medical Equipment industry standards

Climate Goals & Targets

Environmental Challenges

• FDA Safety Communication warning against off-label use of Advanced Energy products, leading to slowed demand
• Recurring net losses and cash outflows from operations
• Global supply chain instability and inflationary cost increases
• Potential impact of additional Ethylene oxide sterilization plant closures

Mitigation Strategies

• Received 510(k) clearances for Renuvion Dermal Handpiece and Renuvion APR Handpiece for specific procedures
• Submitted 510(k) submission for expanded Renuvion APR Handpiece indications
• Implemented activities to eliminate certain operating expenses to improve cash flow
• Entered into a Credit Agreement for up to $35 million facility
• Approved plan to sell and leaseback real property in Clearwater, FL
• Reduction-in-force reducing U.S. headcount by 14%
• Closely monitoring raw material availability, lead times, and freight carrier availability with suppliers

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Hurricanes, tornadoes, and seasonal extremes

Reporting Standards

Frameworks Used: SASB

Certifications: ISO 13485:2016